Title of Proposed Rulemaking

New Source Review, Particulate Matter and Greenhouse Gas Permitting Requirements and Other Permitting Rule Updates

Statutory Authority or other Legal Authority

Statutes Implemented

ORS 468.020, 468A.025

468.065, 468A.040, 468A.055, 468A.310

Need for the Rule(s)

PM_2.5 New Source Review/Prevention of Significant Deterioration: The proposed NSR/PSD rules for PM_2.5 are needed to implement this program once the United States Environmental Protection Agency repeals the PM₁₀ surrogate policy. At that time, EPA rules will require states to update their PSD programs to include PM_2.5. The proposed rules would replace a temporary rule that was adopted on August 19, 2010 and expires on February 28, 2011. The proposed rules differ from the temporary rules because EPA adopted different regulatory standards than anticipated; and DEQ has developed new options for program implementation.

Greenhouse Gas Prevention of Significant Deterioration and Title V permitting: The proposed rules for GHGs are needed in response to regulations promulgated by EPA that require states to update their PSD and Title V programs to include GHGs. If EQC does not adopt these rules, Oregon will lose federal approval to implement the programs and could face sanctions. Adoption of these rules will ensure that sources comply with federal GHG permitting requirements and help DEQ retain approval to implement the PSD and Title V programs.

Small Scale Local Energy Projects: The proposed rule change for small scale local energy projects is needed to align Oregon’s administrative rules with Oregon’s statute (ORS 468A.040).

Permitting Rule Update: The proposed rules are needed because Oregon previously adopted EPA’s acid rain program rules by reference, and EPA has since made revisions to the federal acid rain program rules. Oregon’s rules are now out of date. The proposed rules would adopt the most current, updated federal acid rain program rules by reference.

Documents Relied Upon for Rulemaking

Federal Register / Vol. 75, No. 28 6827/ Thursday, February 11, 2010/ Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (PM2.5); Notice of Proposed Rulemaking To Repeal Grandfathering Provision and End the PM10 Surrogate Policy

http://www.gpo.gov/fdsys/pkg/FR-2010-02-11/pdf/2010-2983.pdf

Federal Register / Docket ID No. EPA-HQ-OAR-2006-0605 / Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (PM2.5) – Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration/Final Rule (SMC) http://www.epa.gov/nsr/documents/20100929finalrule.pdf

Interim Implementation for the New Source Review Requirements for PM2.5 (John S. Seitz, EPA, October 23, 1997)

http://www.epa.gov/ttn/nsr/gen/pm25.html

Federal Register / Vol. 75, No. 28 / Thursday, June 3, 2010 / Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule; Final Rule

http://www.gpo.gov/fdsys/pkg/FR-2010-06-03/pdf/2010-11974.pdf

Federal Register / Vol. 75, No. 170 / Thursday, September 2, 2010 /Action To Ensure Authority To Issue Permits Under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Federal Implementation Plan http://www.gpo.gov/fdsys/pkg/FR-2010-09-02/pdf/2010-21706.pdf

Federal Register/Vol. 75, No. 170/Thursday, September 2, 2010/ Action To Ensure Authority To Issue Permits Under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call http://www.gpo.gov/fdsys/pkg/FR-2010-09-02/pdf/2010-21701.pdf

House Bill 2952 (2009): http://www.leg.state.or.us/09reg/measpdf/hb2900.dir/hb2952.en.pdf

Federal acid rain program rules in 40 CFR Parts 72, 75, and 76, available at:

http://www.gpoaccess.gov/cfr/index.html

Requests for Other Options

Pursuant to ORS 183.335(2)(b)(G), DEQ requests public comment on whether other options should be considered for achieving the rule’s substantive goals while reducing negative economic impact of the rule on business.

Fiscal and Economic Impact, Statement of Cost Compliance

Overview

The proposed rules could have a fiscal and economic impact on approximately 1,256 permitted sources in addition to future applicants:

Business Type

Business Size

Permit Type

Number

City/County Govt

Large

ACDP

42

City/County Govt

Large

Title V

2

State Government

Large

ACDP

22

State Government

Large

Title V

2

Federal Government

Large

ACDP

3

Federal Government

Large

Title V

1

Industrial Business

Large

ACDP

570

Industrial Business

Large

Title V

95

Estimated Number of Large Businesses Potentially Impacted

737

Business Type

Business Size

Permit Type

Number

Industrial Business

Small

ACDP

502

Industrial Business

Small

Title V

17

Estimated Number of Small Businesses Potentially Impacted

519

•  117 facilities in Oregon that are permitted under the Air Quality Division’s Title V Permit Program

•  1139 industrial facilities in Oregon that are permitted under the Air Quality Division’s Air Contaminant Discharge Permit (ACDP) program

PM_2.5 New Source Review/Prevention of Significant Deterioration: DEQ anticipates that there will be a negative fiscal and economic impact on about 386 small and large businesses subject to existing permitting requirements. These businesses will be required to make an initial estimate of PM_2.5 emissions at the time of permit renewal or modification so DEQ can incorporate emission levels into permits. DEQ will develop guidance to help minimize the impact. Oregon’s other 870 permitted sources are on simpler permits that do not require calculation of emissions. The fiscal and economic impact is primarily due to federal requirements, although a portion of the impact is caused by incorporating the federal requirements into Oregon’s unique NSR/PSD program. Additionally, NSR and PSD is a case-by-case analysis, and because the type of pollution controls and computer modeling varies for each case, DEQ lacks available information to accurately estimate those costs. However, DEQ acknowledges that the cost impact of NSR and PSD is typically significant. The application fee alone for this type of permit is $42,000.

Greenhouse Gas Prevention of Significant Deterioration and Title V program: DEQ anticipates that there will be a negative fiscal and economic impact on about 386 small and large businesses subject to existing permitting requirements. Businesses will be required to estimate GHG emissions for their permit renewals or modifications, using a process similar to their GHG reporting requirements. DEQ will develop guidance to help minimize the impact. The fiscal and economic impact is primarily due to federal requirements, although a portion of the impact is caused by incorporating the federal requirements into Oregon’s unique PSD program.

Small Scale Renewable Energy Sources: DEQ anticipates that there will be a positive economic impact for one or more small scale renewable energy sources that may benefit from the ability to obtain offsets from anywhere within a nonattainment area. This benefit results from House Bill 2952 (2009), and is unchanged by this rulemaking.

Permitting Rule Updates: DEQ anticipates that there will be no fiscal and economic impact as a result of the proposed rules.

Impacts on the General Public

PM_2.5 New Source Review/Prevention of Significant Deterioration, GHG PSD and GHG Title V: DEQ does not anticipate any direct, negative fiscal or economic impacts from the proposed rules on the general public. However, indirect fiscal or economic impacts to the public may occur through increased prices for services or products as a result of costs associated with additional control or process equipment that may be required if a source triggers NSR/PSD. DEQ expects any such price increases to be small and lacks available information upon which it could accurately estimate potential increases.

PM_2.5 New Source Review/Prevention of Significant Deterioration: EPA adopted standards for PM_2.5 based on their link to serious health problems ranging from increased symptoms, hospital admissions and emergency room visits to premature death for people with heart and lung disease. The proposed rules could create positive, direct economic benefits by reducing health care costs because the amount of PM_2.5 emissions allowed from new or expanding large businesses will be reduced. However, DEQ is unable to estimate those impacts for Oregon because it lacks available information to project the complicated connection between reductions in those pollutants and the costs of health care.

Greenhouse Gas Prevention of Significant Deterioration: Global warming may create public health problems that can have negative economic impacts. The proposed rules could create positive, direct economic benefits by reducing health care costs because the amount of greenhouse gas emissions allowed from new or expanding large businesses will be reduced. However, DEQ is unable to estimate those impacts for Oregon because it lacks available information to project the complicated connection between reductions in those pollutants and the costs of health care.

Small Scale Renewable Energy Sources: DEQ anticipates that there will be no fiscal and economic impact on the general public as a result of the proposed rules.

Permitting Rule Updates: DEQ anticipates that there will be no fiscal and economic impact on the general public as a result of the proposed rules.

Impacts to Small Business

(50 or fewer employees –ORS183.310(10))

PM_2.5 New Source Review/Prevention of Significant Deterioration, GHG PSD and GHG Title V: DEQ anticipates that there will be a negative fiscal and economic impact on 269 small businesses because they will be required to make an initial estimate of PM_2.5 and GHG emissions at time of permit renewal or modification so DEQ can incorporate emission levels into permits. Additionally, proposed new facilities that would be large sources of PM_2.5 and GHG pollution would also be subject to the rules, but DEQ lacks available information to project what new facilities may be proposed in the future. These businesses have the option of assuming that PM_2.5 emissions are the same as PM₁₀ emissions (already included in their permits), eliminating any additional costs for reporting, recordkeeping or other administrative activities. GHG emissions can be estimated using a process similar to their GHG reporting requirements. The cost of these requirements varies by each business and DEQ lacks available information sufficient to accurately estimate these costs.

DEQ anticipates that there will be a negative fiscal and economic impact on new sources and existing sources if they make a modification to their facility that would trigger New Source Review or Prevention of Significant Deterioration. Additional costs could be incurred if the business had to add control equipment to meet control technology requirements. Sources are also required to perform computer modeling for PM_2.5 to ensure that the health standards are met and air quality in wilderness areas is not degraded. Most of the costs are the result of federal requirements and do not change as a result of adding PM_2.5 and GHGs to the list of regulated pollutants in Oregon. Additionally, NSR and PSD is a case-by-case analysis, and because the type of pollution controls and computer modeling varies for each case, DEQ lacks available information to accurately estimate those costs. However, DEQ acknowledges that the cost impact of NSR and PSD is typically significant. The application fee alone for this type of permit is $42,000.

Small Scale Renewable Energy Sources: DEQ anticipates that there will be no fiscal and economic impact as a result of the proposed rules.

Permitting Rule Updates: DEQ anticipates that there will be no fiscal and economic impact as a result of the proposed rules.

Cost of Compliance on Small Business (50 or fewer employees –ORS183.310(10))

a) Estimated number of small businesses subject to the proposed rule

Currently 17 small businesses are required to hold Title V operating permits. Of the 1,139 industrial facilities holding Air Contaminant Discharge Permits, 502 of them are small businesses. Additionally, proposed new facilities that would be large sources of PM_2.5 and GHG pollution would also be subject to the rules, but DEQ lacks available information to project what new facilities may be proposed in the future.

b) Types of businesses and industries with small businesses subject to the proposed rule

There are several types of businesses and industries with small businesses that will be affected by the proposed rules. These may include asphalt manufacturing; ammonia manufacturing; chemical manufacturing; coffee roasting; commercial bakeries; commercial boilers; crematories; educational institutions; electric power generation; furniture manufacturing; food processing; hospitals; iron and steel; natural gas and oil production and processing; petroleum refining; pipe coaters; printers; sand, rock and gravel operations; seed and grain companies; synthetic resin manufacturing; and wood products manufacturing.

c) Projected reporting, recordkeeping and other administrative activities required by small businesses for compliance with the proposed rule, including costs of professional services

Additional costs for reporting, recordkeeping or other administrative activities are expected if the amendments are adopted. These small businesses will be required to make an initial estimate of PM_2.5 and GHG emissions. Businesses have the option of assuming that PM_2.5 emissions are the same as PM₁₀ emissions (already included in their permits), eliminating any additional costs for reporting, recordkeeping or other administrative activities.

d) The equipment, supplies, labor, and increased administration required by small businesses for compliance with the proposed rule

Additional costs for equipment, supplies, labor or administration are expected if the amendments are adopted and a small business triggers NSR/PSD through facility modification or new construction.

Most of the costs are the result of federal requirements and do not change as a result of adding PM_2.5 and GHGs to the list of regulated pollutants in Oregon. Such cost could include labor for employees or consultants to estimate emissions and prepare permit applications and labor for consultants to test stack emissions. Additional costs could be incurred if the business had to add control equipment to meet control technology requirements. Sources are also required to perform computer modeling for PM_2.5 emissions to ensure that the health standards are met and air quality in wilderness areas is not degraded. Additionally, NSR and PSD is a case-by-case analysis, and because the type of pollution controls and computer modeling varies for each case, DEQ lacks available information to accurately estimate those costs. However, DEQ acknowledges that the impact of NSR and PSD is typically significant. The application fee alone for this type of permit is $42,000.

e) A description of the manner in which DEQ involved small businesses in the development of this rulemaking

Small businesses were invited to attend stakeholder meetings held to discuss proposed rule changes. Stakeholder meetings allowed input on the proposed rules and also comment on the August 19 temporary rules. DEQ sent an announcement of the meetings to all permitted facilities and people who expressed interest in air quality rulemakings. DEQ sent the announcement by postcards, email using Oregon’s GovDelivery system, a free e-mail subscription service that provides subscribers with automatic notices of updates to the Oregon DEQ Web page on topics they select, and posted the announcement on the DEQ website. DEQ provided two weeks to comment on a draft version of the fiscal and economic impact statement.

Impacts on Large Business

(all businesses that are not “small businesses” under ORS183.310(10))

Currently 95 large businesses are required to hold federal Title V Operating Permits. There are also 570 large businesses that hold state Air Contaminant Discharge Permits. These permittees would be subject to the PM_2.5 and GHG portions of the proposed rules. Additionally, proposed new facilities that would be large sources of PM_2.5 and GHG pollution would also be subject to the rules, but DEQ lacks available information to project what new facilities may be proposed in the future.

PM_2.5 New Source Review/Prevention of Significant Deterioration, GHG PSD and GHG Title V: DEQ anticipates that there will be a negative fiscal and economic impact on these sources because they will be required to make an initial estimate of PM_2.5 and GHG emissions at time of permit renewal or modification so DEQ can incorporate emission levels into permits. These businesses also have the option of assuming that PM_2.5 emissions are the same as PM₁₀ emissions (already included in their permits), eliminating any additional costs for reporting, recordkeeping or other administrative activities. GHG emissions can be estimated using a process similar to their GHG reporting requirements. The cost of these requirements varies by each business and DEQ lacks available information sufficient to accurately estimate these costs.

DEQ anticipates that there will be a negative fiscal and economic impact on new sources and existing sources if they make a modification to their facility that would trigger New Source Review or Prevention of Significant Deterioration. Additional costs could be incurred if the business had to add control equipment to meet control technology requirements. Businesses are also required to perform computer modeling to ensure that the health standards are met and air quality in wilderness areas is not degraded. Most of the costs are the result of federal requirements and do not change as a result of adding PM_2.5 and GHGs to the list of regulated pollutants. Additionally, NSR and PSD is a case-by-case analysis, and because the type of pollution controls and computer modeling varies for each case, DEQ lacks available information to accurately estimate those costs. However, DEQ acknowledges that the cost impact of NSR/PSD is typically significant. The application fee alone for this type of permit is $42,000.

Small Scale Renewable Energy Sources: DEQ anticipates that there will be a positive economic impact for one or more small scale renewable energy sources because offsets are not available for sources that are located in remote parts of the nonattainment area. Getting offsets elsewhere in the nonattainment area also benefits air quality since the offsets will come from near where the highest ambient concentrations are located.

Permitting Rule Updates: DEQ anticipates that there will be no fiscal and economic impact as a result of the proposed rules.

Impacts on Local Government

PM_2.5 New Source Review/Prevention of Significant Deterioration, GHG PSD and GHG Title V: Currently 44 county and local government agencies are subject to air permitting regulations. These permittees would be subject to the PM_2.5 and GHG portions of the proposed rules. Additionally, proposed new facilities that would be large sources of PM_2.5 and GHG pollution would also be subject to the rules, but DEQ lacks available information to project what new facilities may be proposed in the future.

DEQ anticipates that there will be a negative fiscal and economic impact on these sources because they will be required to make an initial estimate of PM_2.5 and GHG emissions at time of permit renewal or modification so DEQ can incorporate emission levels into permits. These government agencies also have the option of assuming that PM_2.5 emissions are the same as PM₁₀ emissions (already included in their permits), eliminating any additional costs for reporting, recordkeeping or other administrative activities. GHG emissions can be estimated using a process similar to their GHG reporting requirements. The cost of these requirements varies by each permittee and DEQ lacks available information sufficient to accurately estimate these costs.

DEQ anticipates that there will be a negative fiscal and economic impact on local government agencies if they build new sources and or modify existing sources that would trigger New Source Review or Prevention of Significant Deterioration. The costs would be similar to large businesses as mentioned above.

Small Scale Renewable Energy Sources: DEQ anticipates that there will be no fiscal and economic impact as a result of the proposed rules.

Permitting Rule Updates: DEQ anticipates that there will be no fiscal and economic impact as a result of the proposed rules.

Impacts on State Agencies other than DEQ

PM_2.5 New Source Review/Prevention of Significant Deterioration, GHG PSD and GHG Title V: Currently there are 24 state and 4 federal government agencies subject to air permitting regulations. These permittees would be subject to the PM_2.5 and GHG portions of the proposed rules. Additionally, proposed new facilities that would be large sources of PM_2.5 and GHG pollution would also be subject to the rules, but DEQ lacks available information to project what new facilities may be proposed in the future.

DEQ anticipates that there will be a negative fiscal and economic impact on these sources because they will be required to make an initial estimate of PM_2.5 and GHG emissions at time of permit renewal or modification so DEQ can incorporate emission levels into permits. State and federal government agencies have the same options available to them as mentioned above for local government agencies. The cost of these requirements varies by each permittee and DEQ lacks available information sufficient to accurately estimate these costs.

DEQ anticipates that there will be a negative fiscal and economic impact on state agencies other than DEQ if they build new sources and or modify existing sources that would trigger New Source Review or Prevention of Significant Deterioration. The costs would be similar to large businesses as mentioned above.

State and federal government agencies would incur the same fiscal and economic impacts as local government agencies mentioned above.

Impacts on DEQ

PM_2.5 New Source Review/Prevention of Significant Deterioration, GHG PSD and GHG Title V: Workload for DEQ will increase as a result of incorporating PM_2.5 and greenhouse gases into permits. If the PM_2.5 and GHG thresholds for the New Source Review/Prevention of Significant Deterioration program are not adopted, there would be a significant workload impact on DEQ, because many more sources would become subject to NSR/PSD. This includes an increase in costs associated with issuing NSR/PSD permits.

Small Scale Renewable Energy Sources: Workload for DEQ will increase as a result of permitting one or more small scale renewable energy sources that may be affected by the proposed rules.

Permitting Rule Updates: Workload for DEQ should not change as a result of the proposed rules.

Assumptions

PM_2.5 New Source Review/Prevention of Significant Deterioration, GHG PSD and GHG Title V: If the PM_2.5 and GHG thresholds for the New Source Review/Prevention of Significant Deterioration program are not adopted, an indeterminate number of sources would subject to NSR/PSD for PM_2.5 or GHG emissions. The reason for this is because without establishing a significant emission rate as proposed by this rule, any increase in emissions of PM_2.5 or GHGs by a source would trigger NSR/PSD. Several hundred of these permits may need to be issued or modified creating significant workload issues.

Housing Costs

DEQ determined that the proposed rule changes may have a negative impact on the

development of a 6,000 square foot parcel and the construction of a 1,200 square

foot detached single family dwelling on that parcel if the costs for additional control or process equipment are passed through by sources providing products and services for such development and construction. The possible impact appears to be minimal. DEQ cannot quantify the impact at this time because the information available to it does not indicate whether the costs would be passed on to consumers and any such estimate would be speculative.

Administrative Rule Advisory Committee

Stakeholder meetings allowed input on the proposed rules and also comment on the August 19 temporary rules. DEQ sent an announcement of the meetings to all permitted facilities and people who expressed interest in air quality rulemakings. DEQ sent the announcement by postcards, email using Oregon’s GovDelivery system, a free e-mail subscription service that provides subscribers with automatic notices of updates to the Oregon DEQ Web page on topics they select, and posted the announcement on the DEQ website. DEQ provided two weeks to comment on the fiscal and economic impact statement.

DEQ did not use an Advisory Committee but held several meetings with stakeholders to discuss topics of interest to them.